Audit Commission calls for cuts to secondary care tariffs

The NHS should slash the costs of some secondary care activity now some hospitals have shown they can deliver some episodes more cheaply than others.

Such a move – proposed by the Audit Commission in a major assessment of the Payment by Results financial regime since its inception in 2003 – would free up budgets to allow commissioners to spend more on other services and ensure they were not paying over the odds for care.

Audit Commission chair Michael O'Higgins said: ‘Looking forward, Payment by Results needs to develop so that it does what it says on the tin. In order to encourage a more efficient way of working, the price that the NHS sets for procedures should be set at the lower levels that some hospitals have shown can be achieved, rather than the average cost.

The NHS should also consider rewarding those hospitals that meet the highest standards of quality for patients. Currently hospitals are paid the same for a procedure regardless of the quality of care provided.'

The Audit Commission has also demanded significant improvement to the timeliness and quality of data available to PCTs through the Secondary Uses Service for monitoring contracts and making payments.

There also needs to be greater scope to unbundle tariffs into separate components of care to facilitate service redesign, and commissioners and providers should also be allowed to mutually agree local prices in order to take account of significant innovations in service delivery not currently reflected in the national tariff.

Dr Jonathan Fielden, chair of the BMA's consultants committee, said too often PbR had been used as a ‘blunt financing tool' and there was ‘some evidence that PbR may interfere with clinical judgment where trusts have put finance ahead of patient care'.

He added: ‘Clinicians must have a greater role to facilitate improvements in decision-making and the care.'

The right result? Payment by Results 2003-07 can be found at www.audit-commission.gov.uk.

The verdict on payment by resultsThe verdict on payment by results The verdict on payment by results

PbR has contributed to:• an increase in the number of patients treated as day cases• a reduction in the length of time patients spend in hospital• strengthened financial management, information systems and overall planning• a reduction in avoidable admissions to hospitals• a better understanding of costs among trustsPbR is hampered by:• delays and inaccuracies of data• outstanding inconsistencies and ambiguities related to data definitions• variable PCT performance on monitoring provider activity and engaging practice-based commissioners in the process• ‘significant weakness' in commissioning among PCTs